Sparky's Sells Auto Parts -
Using Sparky's Financial Information What Is the Company's

question 6

Multiple Choice

Sparky's sells auto parts. Provided below is selected financial information from the company's 2012 annual report:
$\begin{array}{lll}\underline{\text { Sparky's Selected Fimancial Statementdata }} \\\text { Fiscal year end } & \mathbf{2 0 1 2} & \mathbf{2 0 1 1} \\\text { (amounts in thousands of dollass) } & \\\text { Net sales } & \$ 125,410 & \$ 106,380 \\\text { Cost of GoodsSold } &-104,090 & -89,359 \\\text { GrossProfit } & \$ 21,320 & \$ 17,021\\\\\text { Inventory}& \$ 31,353 & \$ 30,850\end{array}$
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Using Sparky's financial information what is the company's inventory turnover ratio for 2012?

• A) 0.69
• B) 1.00
• C) 3.35
• D) 4.03

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Definitions:

Explicit Cost

Direct, out-of-pocket payments for goods or services that a company incurs in the course of doing business.

Economic Profit

The difference between the total revenue received by a firm and the total cost of all resources used, including opportunity costs.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision. It represents the benefits an individual, investor or business misses out on when choosing one alternative over another.

Implicit Rate

The implied rate of return that is not explicitly stated, often used in the context of comparing the cost of borrowing to the rate of return on investments.